We saw a huge decline in the market in the last few days. What levels we can expect after this huge decline in the market? What should be the support and resistance for Nifty and bank nifty for the coming sessions?
Due to the coronavirus issue, there is a huge uncertainly in global markets. Indian market too effecting from this issue. Sentiments are totally weak.
FIIs sold huge in the last few sessions. There is no sign of recovery in the market. In this type of market where lots of uncertainly are already there, I try to analyze the chart and Open interest data and find some levels we should follow in the coming sessions. Let us look at nifty first.
Nifty support and resistance for the coming sessions
After a huge decline in the last few weeks, we can see Nifty is trying to take some support around 11000 levels. This is the major and crucial support in terms of the short to medium-term trend.
On the Upside, 11300 is acting as a resistance based on the chart. If you follow the Fibonacci retracement tool. You will find that 50% – 61.8% zone is acting as a reversal zone and breakdown from 61.8% (which is at around 11300) level can hit the next 78.6% level (which is at around 11000).
So based on the chart, we can say that 11000 and 11300 can be our support and resistance of Nifty for coming sessions.
Let us look at Open interest data for more confirmation.
Nifty Option chain analysis
Based on option chain data, the highest Open interest stands at 11400 CE & 11000 PE, followed by 11500 CE & 11200 PE. PCR at 11000 stands at 10+, which is acting as an immediate support level.
The Put-call ratio at 11300 stands at 0.41, which is acting as a resistance level.
Significant open interest buildup on the call side, Especially 11300 CE, 11400 CE and 11500 CE which indicates that the market is facing some resistance from high levels. Based on Option chain data, 11000 is a good support level and 11300 is the good resistance level for coming sessions.
Keep tracking Change in open interest to analyze market participant’s behavior. If you want to know how can you find Nifty and bank nifty support and resistance based on option chain data, can enroll for our Option Strategies – A Mentorship Program.
So after analyzing both the data points, we can say that 11000 & 11300 are the support and resistance of nifty for coming sessions.
Bank Nifty support and resistance for the coming sessions
After a Gap-down opening on 28th February and a huge decline of almost 1000 points on 2nd March, we can see today Bank nifty is trying to take some support around 28800.
I’m following the Fibonacci Retracement tool most. The reason is it tells the next support or resistance level and most of the time market gave respect to these levels. It’s a simple and clear tool and no need to follow any other tool along with it.
Now, if we look at the levels we are getting from the Fibonacci tool, 28850 – 29570 is the reversal zone. Most of the time market reverse from these levels.
So we can say that bank nifty support and resistance levels for coming sessions are 28850 & 29570. For more confirmation, let us look at the option chain data.
Bank Nifty Support and resistance based on chain analysis
Based on option chain data, the highest Open interest stands at 30000 CE & 28000 PE, followed by 29500 CE & 28500 PE.
PCR at 28500 stands at 10, which is acting as an immediate support level. The Put-call ratio at 29500 stands at 0.24, which is acting as a resistance level.
Now taking consideration of both the data points, We can say that 28800-28500 can be the support zone and 29500 can be the resistance in bank nifty.
We saw a huge decline in the market in the last few weeks and volatility is very high in the market. So do not take any unlimited risk strategy. Trade with limited risk strategies only.
It’s very important to safeguard your capital in such type of wild movements. So focus more on risk management and stay away from unlimited risk strategies. Capital protection must be your first priority.
Do not try to bottom fishing. Sell on risk should be your strategy, instead of buy on dips if you are trading for a very short term. The market is down, accept it and make a strategy accordingly.
Post your comments in the comment box if you have a query related to Nifty and Bank Nifty support and resistance. You can ask any question related to option trading in the comment box.
If you need More real-time assistance on Nifty and Bank nifty weekly options strategy Can take our premium subscription. You will get real-time assistance every month on options strategies. You can contact us on WhatsApp
*(Please avoid any question like which Call or Put we should buy in the coming week because we never trade naked long options).
Options Strategies – A Mentorship Program
On September 01, 2019, We have launched a new mentorship program for Option strategies, in which we’ll discuss how can we deploy these strategies? What rules we should follow before taking a trade? And what should be our adjustments if the script is moving against your direction?
Looking for the Best strategy for Bank Nifty Future?
We Introduce a new BankNifty Future strategy for Intraday. Giving around 70%+ yearly return. Please check the link below for more information.
DISCLAIMER: – we are not a SEBI research analyst. Views posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.